Tuesday, November 10, 2015

It's been a rough year for investors of JG Boswell, one of our favorite all-time high-quality pink sheet names. The dividend was cut in half to $2.25/quarter, and shares are down 29% year to date. The drought has no doubt had an effect on the company. Sales fell 27% year over year, but the company still managed to turn a $19 million profit. We were expecting it to be much worse.

Thanks to the addition
of the most recently available year-end data, we've now strung together thirteen years worth of fundamentals for JG Boswell. Below are some of the
highlight for 2015:

Boswell remains one of deep value's greatest mysteries. What is it truly worth, and will we ever find out?

Stay tuned.

*The
author has a position in JG Boswell (BWEL). This is neither a
recommendation to buy or sell any securities. All information provided
believed to be reliable and presented for information purposes only.

Tuesday, June 16, 2015

Editor's Note: This post was originally published in 2007, to observe what would have been the 100th birthday of one of this site's original namesakes, my grandfather. Twenty one year's after his death, his influence is still present. His then unborn great granddaughter, whom he missed meeting by three months, is about to turn 21, and enter her senior year in college.

Remembering Clyde

June
16th marks the 100th birthday of one of this site’s namesakes, my
grandfather, friend, mentor, buddy, and the list goes on. The man
exerted a great deal of influence on my life, and our time together
-including the day he passed away in my presence 13 years ago- is
forever etched in my mind.

Today
we jettison the typical Cheap Stocks investment related drivel, and
instead pay tribute to a great man who left countless people better than
he found them. If he were alive today, he’d be puzzled by his
grandson’s website. “Value” to him had to do with doing an honest day’s
work, keeping your word, and serving others. “Growth” was about the
tomatoes and peas in his garden, and “investing” was related to the time
you spent serving others needs. The only stock he ever owned was the 20
shares of Ringling Brothers stock one of his sons purchased for him in
the 1960’s. The circus was everything to him— at an early age when the
circus was in town he’d work all day helping them to set up just for a
ticket to that evening’s show--and his canceled Ringling Brothers stock
certificate (Ringling was acquired by Mattel in the early 70’s) is
proudly displayed in my home in tribute.

He
never made it much past the eighth grade. That’s what happens when you
get kicked out of school for knocking your school’s principal on his
rear-end. Oh, and by the way the principal happened to be his Uncle Ed.
As the story goes, young Clyde was accused of something he did not do,
and good old Uncle Ed took a switch to him in the school office. Clyde
wasn’t standing for that, and you know the rest—down went Uncle Ed. The
incident stood with my grandfather—I recall him telling me on one of our
frequent weekend ventures to his old stomping ground in Easton, PA
about the dream he’d had the night before; here he was in his late 70’s
and he’d dreamt of urinating on Uncle Ed’s grave. The past died hard for
him. Being kicked out of school in many ways shaped his future—fueling a
success story not measured in dollars, because there weren’t many of
those, but measured instead by service to others, hard work, pride in
all that he did, and sons and grandchildren who revered him.

He
was part of the greatest generation. During World War II the GM plant,
where he served as Master Heat Treater, made the conversion from autos
to airplanes, and his ingenuity-not learned in any classroom- earned him
awards, and helped GM build Grumman Avengers more quickly and
efficiently.

After
moving to Ewing NJ in the late 1930’s, he and a few buddies realized
that this growing area needed a rescue squad. They became educated about
wound care and emergency medicine, bought a used Hearse to serve as an
ambulance, and The Pennington Road Rescue Squad was born. Born out of
guts, ingenuity, fortitude, and a desire to serve others.

My
grandmother preceeded him in death, and it was then that we found out
what “investing” meant in my grandmother's eyes. It meant hiding cash
from her husband. The several thousand dollars in cash we found,
including bills from the 1930’s through the 1960’s, bore witness to
this. Evidently, the combination of living through the Depression, and
fear that my grandfather would give it all away to anyone in need
prompted my grandmother to keep a secret stash.

You
really couldn’t blame her. A great woman in her own right, she’d seen
it all. She’d seen my grandfather stop to help a stranger who’d run out
of gas during the war, syphon it out of his tank and into the
stranger’s, then run out of gas himself a few minutes later. Anything to
help someone in need.

My
resume' may be a lot longer than his, not that he ever had one. I had
the opportunity to graduate from college, grad school, earn other
professional designations, etc. But My grandfather, Clyde, was way
smarter, way more accomplished, more ingenious and a better "investor"
than I will ever be.

Happy
100th birthday, Clyde. I miss you, think of you often, am grateful for
the times we had together, and for the lessons you taught me.

Friday, January 30, 2015

The net/net cupboard has been bare the past couple of years; the worst we've ever seen in the umpteen years we've been researching and writing about our favorite cubbyhole of the deep value world. That's left us with little to write about. While this site was originally devoted to net/nets, we've delved into other areas of deep value over the years (by our definition, anyway), including real estate. But value has itself has been difficult to find, there have not been many compelling ideas, and we've done what value investors do in those situations--go into hibernation.

In fact, we've rarely run our favorite stock screen the past several months- the one that identifies companies trading below net current asset value, aka the ever-elusive net/net.

We've been anxious to create our third experimental net/net index (the first two (Cheap Stocks 21 and Cheap Stocks 26) had interesting but inconclusive results; but we've been unable to identify enough candidates, and "Cheap Stocks 4" just won't do the trick..

So it was with a small amount of joy earlier this week when we begrudginly ran our favorite screen, and found a whopping four net/nets with market caps in excess of $100 million. Granted, two of them are what we refer to as "perennial net/nets", seemingly always showing up. These are Richardson Electronics (RELL) and Trans World Entertainment (TWMC). We also found an old friend, that has occasionally made the cut, LeapFrog (LF), which recently ran aground on some very bad guidance. In facts, shares fell 34% last Friday, and are down 50% since December. We plan on digging in to see if there's any meat left on the bone. It gets ugly in net/net land.

Finally, there's a new kid on the block, that being retailer Sears Hometown Outlet Stores (SHOS), which is currently trading at .92 times NCAV. Retailers are often the ugliest of the net/nets, as their current assets are typically chock full of inventory. There have been some great retail net/net success stories over the years, including Finish Line (FINL), and Conns (CONN), but you have to be careful with these.

SHOS shares are down 44% in the past year, and while we are skeptical of retailers, we'll be digging into this one as well, looking for any redeeming qualities, other than the fact that it trades at .62 times book value, and is a net/net.

*The author has a position in Richardson Electronics (RELL). This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

Friday, January 23, 2015

Tootsie Roll Industries (TR) has been my long-time nemesis. I held a position in the stock for several years, seeing what I believed to be the enormous value in the brand combined with aging insider-owners Melvin and Ellen Gordon. It seemed ripe for a takeover; a perfect acquisition for Hershey (HSY), or some other larger name seeking to expand their brand portfolio. At least that's what I believed.

The problem, though was two-fold: On the fundamental front, revenues were flattening, once mid-teen net profit margins were falling, and what was a great brand seemed to be lost in the shuffle. Secondly, the aging owners, the Gordons, were not going anywhere.

I finally realized the latter one day after receiving the 2007 annual report. Inside was a picture of Mel and Ellen Gordon, looking much younger than their years. The Gordon's essentially controlled the Class B voting shares, and called the shots. To me, their compensation seemed excessive, especially given the company's declining results, lack of growth and direction. But, they were not giving up this cash-cow. I, however, finally gave up.

Mel's passing is sad; and it's quite amazing that he stayed engaged as long as he did. The baton now passes to Ellen Gordon, formerly the company's chief operating officer, age 83, whose family acquired the company when it ran into trouble in 1935.

Shares were up 7% after the announcement of Mel's death amid new speculation that the company will be acquired.

Don't hold your breath though. Ellen Gordon is only 83.

We've been to this rodeo before.

*The author has no position in any stocks mentioned in this piece. This is neither a recommendation to buy or sell this security. All information provided believed to be reliable and presented for information purposes only

*The author has a position in JG Boswell (BWEL). This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

Monday, July 28, 2014

Following a 10-day mission trip to a small and very poor
community in the Dominican Republic, I’ll never view Facebook (FB) through the
same lens that I had previously. I’ve long had a love-hate relationship
with the company; hating the stock, but sometimes loving the application.

Now,
while I’ve grown weary of the endless stream of “look how great little Bobby
is”, “look at my awesome vacation photos”, "I just ate pancakes" or posts describing a 50-year old
friends first colonoscopy, I do understand just how wide Facebook’s reach is.

Two years ago, we met 10 year-old Jhon at our construction
site in the DR; when he learned that we had the same first name (more or less), he rarely
left my side for the next ten days, and we bonded. Young Jhon cried on our last day, and
presented me with a drinking glass from his home, which I still treasure. Last year, when I could not make the trip I was saddened, because I missed the little guy.
Jhon looked for me; when my daughter, who was able to go told him I would not be there, he cried
again.

This year, the now 12 year old Jhon greeted me on our first work
day, and I saw him frequently as we worked. The day we left this year he did
not cry; Jhon has grown up. But he did make a request; not just from me, but several from our
team. He wanted our full Facebook names so that he could friend us. I could not
understand what he was asking me at first; he spoke no English, and I no
Spanish. But after he said “Faybuk” several times, I finally got it, and was
somewhat astonished.

Here, in a very poor Dominican city, well known as one of
the most polluted cities (due to a former battery factory) in the world, a
twelve year-old, lacking most if not all of the conveniences we take for
granted living in the United States, wanted to connect on Facebook. And young
Jhon was not the only one; several other children made the same request of me
and others. If nothing else, I
dramatically underestimated how wide reaching the Facebook phenomenon is.

Lest you think that this value investor, however, has
completely lost his mind, my opinion of Facebook the stock is unchanged. I
still believe it is vastly overpriced, and can’t fathom the $195 billion market
cap that the market has blessed the company with.

However, I am impressed with the companies reach and name recognition. That still does not make it a great stock, though.

Friday, July 18, 2014

It's the slimmest of pickings this day in the net/net land, a place that no publicly traded company would go by choice. With just three U.S. companies with market caps in excess of $100 million currently trading below net current asset value, Richardson (RELL) appears to be the best of the bunch. The others are Trans World Entertainmant (TWMC), and Imation (IMN).

Richardson currently trades at just .86 times NCAV, and the quality of the balance sheet is excellent, including $130.5 million, or $9.30 per share in cash and short-term investments.Considering the company's current $10.23 price, that's compelling. The company has no debt, and trades at .81 times tangible book value, and currently yields 2.4%

While still profitable, which can sometimes be uncommon for net/nets, revenues and profits have been sliding.

Richardson is scheduled to report fourth quarter and full year results on July 23rd.We'll be particularly interested in whether the company has maintained or grown its cash and short-term investment balances.Richardson Electronics (RELL)
Price: $10.23
Market Cap: $143.5 million
NCAV: $166.3 million
Mkt Cap/NCAV: .86
Cash: $97.2 million
S/T Investments: $33.3
Tangible Book Value/Share: $12.56P/TBV: .81
Trailing P/E: 85
Dvd Yield 2.4%

*The author has a position in Richardson Electronics. This is neither a
recommendation to buy or sell any securities. All information provided
believed to be reliable and presented for information purposes only

Wednesday, July 16, 2014

The
10th Annual New York Value Investing Congress is just weeks away
(Sept. 8-9), ​but there’s still time to ​get your seat and enjoy the
many benefits of attending the Congress in-person:

·Speaker ​Wisdom–
Congress speakers explain their stock ideas with detailed, well-reasoned
analysis. But the presentations are not live-streamed or distributed
afterwards, soonly onsite attendees benefit from the ​brilliance of
these ​successful money managers.

·Audience Q&A – Congress attendees are
savvy, professional investors and their insightful questions often clarify and
expand on a speaker’s investment thesis. As with speaker commentary,
live Q&A is only available to onsite attendees.

·Exclusive Information –The Congress is closed to the media and
live bloggers-- our attendees benefit first from actionable information.

·Great Networking – The VIC Cocktail
Reception has become a favorite among attendees for sharing new ideas, creating
new business opportunities and making friendships that ​canlast a lifetime.

Register
now and benefit from attending the Congress in-person. But seats are
strictly limited to 275, so we encourage Cheap Stocks readers to
register now, before we sell out.

Monday, June 16, 2014

Today we are re-running one of our favorite all-time posts, which was originally published seven years ago today. It was dedicated to my grandfather Clyde in recognition of his 100th birthday. Today would have marked 107.

Remembering Clyde

June 16th marks the 100th birthday of one of this site’s namesakes, my grandfather, friend, mentor, buddy, and the list goes on. The man exerted a great deal of influence on my life, and our time together -including the day he passed away in my presence 13 years ago- is forever etched in my mind.

Today we jettison the typical Cheap Stocks investment related drivel, and instead pay tribute to a great man who left countless people better than he found them. If he were alive today, he’d be puzzled by his grandson’s website. “Value” to him had to do with doing an honest day’s work, keeping your word, and serving others. “Growth” was about the tomatoes and peas in his garden, and “investing” was related to the time you spent serving others needs. The only stock he ever owned was the 20 shares of Ringling Brothers stock one of his sons purchased for him in the 1960’s. The circus was everything to him— at an early age when the circus was in town he’d work all day helping them to set up just for a ticket to that evening’s show--and his canceled Ringling Brothers stock certificate (Ringling was acquired by Mattel in the early 70’s) is proudly displayed in my home in tribute.

He never made it much past the eighth grade. That’s what happens when you get kicked out of school for knocking your school’s principal on his rear-end. Oh, and by the way the principal happened to be his Uncle Ed. As the story goes, young Clyde was accused of something he did not do, and good old Uncle Ed took a switch to him in the school office. Clyde wasn’t standing for that, and you know the rest—down went Uncle Ed. The incident stood with my grandfather—I recall him telling me on one of our frequent weekend ventures to his old stomping ground in Easton, PA about the dream he’d had the night before; here he was in his late 70’s and he’d dreamt of urinating on Uncle Ed’s grave. The past died hard for him. Being kicked out of school in many ways shaped his future—fueling a success story not measured in dollars, because there weren’t many of those, but measured instead by service to others, hard work, pride in all that he did, and sons and grandchildren who revered him.

He was part of the greatest generation. During World War II the GM plant, where he served as Master Heat Treater, made the conversion from autos to airplanes, and his ingenuity-not learned in any classroom- earned him awards, and helped GM build Grumman Avengers more quickly and efficiently.

After moving to Ewing NJ in the late 1930’s, he and a few buddies realized that this growing area needed a rescue squad. They became educated about wound care and emergency medicine, bought a used Hearse to serve as an ambulance, and The Pennington Road Rescue Squad was born. Born out of guts, ingenuity, fortitude, and a desire to serve others.

My grandmother preceeded him in death, and it was then that we found out what “investing” meant in my grandmother's eyes. It meant hiding cash from her husband. The several thousand dollars in cash we found, including bills from the 1930’s through the 1960’s, bore witness to this. Evidently, the combination of living through the Depression, and fear that my grandfather would give it all away to anyone in need prompted my grandmother to keep a secret stash.

You really couldn’t blame her. A great woman in her own right, she’d seen it all. She’d seen my grandfather stop to help a stranger who’d run out of gas during the war, syphon it out of his tank and into the stranger’s, then run out of gas himself a few minutes later. Anything to help someone in need.

My resume' may be a lot longer than his, not that he ever had one. I had the opportunity to graduate from college, grad school, earn other professional designations, etc. But My grandfather, Clyde, was way smarter, way more accomplished, more ingenious and a better "investor" than I will ever be.

Happy 100th birthday, Clyde. I miss you, think of you often, am grateful for the times we had together, and for the lessons you taught me.